Dean Baker
Al Jazeera America, February 1, 2016

February 2016, Max B. Sawicky

With less than a week left in Haitian President Michel Martelly’s term, and no elected successor to take office, Haiti remains mired in political uncertainty. As negotiations take place over what comes next, one key issue will be whether to go back and investigate the first round results before moving forward.

Many within the international community and the Haitian government are seeking to move forward as quickly as possible with the same two candidates that were scheduled to participate in the January 24 runoff. On the other hand, protesters and many within civil society are advocating a further investigation and verification of the vote.  The Organization of American States (OAS) dispatched a special mission to Haiti yesterday to facilitate dialogue on next steps.

The main argument against further verification has relied on the “quick count” conducted by the OAS on election day that was based on a sample of tally sheets observed from polling centers throughout the country.

The OAS count has been used by others to argue that fraud allegations are overblown. During an OAS council meeting last week on the situation in Haiti, Gerardo de Icaza, the head of the OAS electoral observation department, said the “results published by the CEP [Provisional Electoral Council] agreed with the OAS statistical sample,” and that the organization had conducted three other statistical tests that all showed the same top four candidates.

During an interview in December, State Department Special Coordinator Ken Merten told me that there had not been credible proof of fraud and the U.S. “understanding is that both the U.N. and OAS think the results were close to the quick count.”

Telegraphing why this matters in the current context, the European Union representative, speaking at the same OAS meeting last week, stated the EU’s desire to see the electoral process move forward, “considering the results of the process so far.” In other words, this means moving forward without any verification of the first round results.

But the OAS’s quick count does not mean what they want you to think it means. There are serious concerns about what percentage of the votes cast were legitimate votes but the OAS count sheds no light on this crucial issue.

I have tremendous respect for Paul Krugman. I also consider him a friend. For these reasons I am not eager to pick a fight with him, but there is something about his criticisms of Bernie Sanders that really bothered me.

In a blog post last week, Krugman told readers:

“As far as I can tell, every serious progressive policy expert on either health care or financial reform who has weighed in on the primary seems to lean Hillary.”

While I already had some fun with the idea of Krugman revoking the credentials of everyone who works in these areas who does not back Clinton, the appeal to the authority of the “experts” is more than a bit annoying. The reason is that the “experts” do not have a very good track record of late and still have a long way to go to win back the public’s trust.

To start with the obvious, almost none of the experts saw the 2008 collapse coming. Almost all of them dismissed the idea that there was a housing bubble and even the few that grudgingly acknowledged the possibility of a bubble insisted that it could not have much consequence for the economy.

Given the devastation wreaked by the collapse of this bubble, this failure is comparable to weather forecasters missing Hurricane Katrina. Just to be clear, I don’t mean failing to recognize the full severity of the storm, I mean missing the hurricane altogether and forecasting nothing but blue skies for the day it hit. The public could be forgiven for not wanting to trust future forecasts.

John Judis has an interesting piece in Vox on the success so far of Donald Trump and Bernie Sanders. They have garnered the support of large numbers of voters who are disaffected with the agenda pushed by the mainstream in both parties. Judis argues that this agenda, which he alternatively describes as “neo-liberal” or “free market,” has been responsible for the rising economic insecurity of the white middle class. This insecurity has led Republicans to embrace Trump’s nationalistic and often racist agenda as well as Sanders’ openly left-wing agenda of a radically expanded welfare state.

There is an important point that Judis leaves out of his story. The policies that have led to so much upward redistribution were not simply “free market,” they were policies that were designed to redistribute income upward.

Starting with trade, the agreements pushed by presidents from both parties did not subject all areas equally to international competition. They quite explicitly put less-educated workers in direct competition with low-paid workers in the developing world by making it as easy as possible to set up factories in Mexico, China, and elsewhere and ship the products without barriers back to the United States. The predicted and actual effect of this sort of trade is to reduce the number of jobs and wages for manufacturing workers. And, by denying workers opportunities in manufacturing, this also puts downward pressure on the wages in the service sectors where former manufacturing workers then looked for jobs.

Real free trade agreements would have made it easier for people in India, China, and elsewhere to train to U.S. standards and then work as doctors, dentists, lawyers and in other highly paid professions in the United States. Instead, the barriers in these professions were largely left in place or even increased.

Driving down the wages of these high-end professionals would have reduced the cost of health care, dental care, and legal services. This raises the real wages of other workers. If the wages of doctors in the United States were reduced to the level of doctors in Europe, it would reduce what we pay our doctors by roughly $100 billion a year. This would be sufficient to add almost $1,000 a year to the paycheck of every worker in the bottom 70 percent of the workforce.

January 29, 2016

It continues to amaze me that we have people simultaneously running around terrified that the robots will take all the jobs and at the same time that we will not have enough workers to support a growing population of retirees. (In some cases, it is the same people.) In the first case, productivity would have to go through the roof for a job shortage to be a problem. In the second case, it would have to go through the floor, since even modest rates of productivity growth swamp the impact of the aging of the population.

Thomas Edsall struggled with this issue earlier this week when a cyber-attack was preventing me from getting in my two cents. Now that I’m back, let me firmly throw my hat in with the middle position.

First, the robots taking all the jobs story is almost absurd on its face. How fast do we think productivity will grow that demand and reduced hours cannot keep pace? Productivity grew at a 3.0 percent annual rate from 1947 to 1973. We saw rapid growth in pay and living standards and very low rates of unemployment. Do we think the story would have looked worse if annual productivity growth was 4.0 percent?

It is almost impossible to imagine a story where productivity growth suddenly jumps from its current rate of less than 1.0 percent annually to a pace so rapid that we are losing jobs left and right due to improvements in technology. It is possible to tell a story where the Fed raises interest rates to slow the economy and job creation even as technology is displacing more and more workers.

That is a plausible story given that we have had several members of the Fed’s Open Market Committee that sets interest rates who have been worried about hyper-inflation. But the problem in that case is crazy-bad Fed policy, not robots taking jobs. And, we do the country a horrible disservice if we imply that the problem is somehow technology rather than the people running the Fed.

On the other side, the techno-pessimists essentially want us to believe that we have few or no opportunities to reduce our need for labor, while still maintaining our living standards. That seems to contradict what I see almost everywhere I go.

To take my favorite easy targets, combined employment in restaurants and retail is just over 27 million out of total private sector employment of 121 million. This comes to a bit over 22 percent. Imagine this was cut in half.

Mark Weisbrot
Al Jazeera America, January 29, 2016

Mark Weisbrot
El Planeta, 21 de enero, 2016

January 29, 2016 (GDP Byte)

The graph above is interesting. It looks at newly employed persons, a group that includes all new hires except for people who were previously employed. There has been an increasing trend during the recovery for employers to hire people who are not in the labor force rather than people who are unemployed.

Before we proceed any further, it’s worth clarifying the Bureau of Labor Statistics’ definitions of the terms employed, unemployed, and not in the labor force (all persons who are employed or unemployed are part of the labor force):

• Employed: Someone who has a job and is currently working;
• Unemployed: Someone who does not have a job, wants one, and has applied for a job within the past four weeks;
• Not in the Labor Force: Someone who does not have a job and has not applied for a job within the past four weeks.

The graph above does not include people who move from one job to another. (However, it’s worth noting that job mobility has been declining – employers are generally not poaching workers from other firms. This means that employers are not competing to hire workers and therefore not raising wages.) Rather, the graph looks at newly employed persons and asks whether they were unemployed or not in the labor force in the previous month.

It’s not surprising that the Washington Post (owned by billionaire Jeff Bezos) would be unhappy with a presidential candidate running on a platform of taking back the country from the millionaires and billionaires. Therefore the trashing of Senator Bernie Sanders in an editorial, “Bernie Sanders fiction-filled campaign,” was about as predictable as the sun rising.

While there is much here that is misleading, it’s worth focusing on the central theme. The piece tells readers:

“The existence of large banks and lax campaign finance laws explains why working Americans are not thriving, he says, and why the progressive agenda has not advanced. Here is a reality check: Wall Street has already undergone a round of reform, significantly reducing the risks big banks pose to the financial system. The evolution and structure of the world economy, not mere corporate deck-stacking, explained many of the big economic challenges the country still faces. And even with radical campaign finance reform, many Americans and their representatives would still oppose the Sanders agenda.”

Dean Baker
The Seattle Times, January 21, 2016